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Landmark Spanish Legal Ruling In Favour Of Mortgagee

On Wednesday the 26th of January Spain saw a landmark ruling in favour of a mortgagee over his bank.

The unnamed Spanish resident who handed back the keys to BBVA Bank when he was unable to maintain his mortgage payments has been dissolved of responsibility by the Judge for the outstanding amount between the loan and the amount the bank finally sold the property for after repossessing.

Whilst it has long been the case that if a bank agrees to take property back any future responsibility from the borrower is removed; in cases where the keys are handed back and the bank has not agreed to take property back; a continuing lifetime responsibility to pay back any difference exists.

The legal deed signed by borrowers stipulates they are giving both the property as security and a personal guarantee.

In an American style ruling the Judge stated that it was morally wrong for banks who irresponsibly lent during boom times; and caused the financial issues now affecting Spain and its unemployment levels; to be able to continue to pursue an individual for their lifetime and that the bank took security of a property this being the difference between granting a mortgage and granting a personal loan.

It will be interesting to see if this ruling speeds up the mortgage reform which many politicians and the public have been pushing for and what affect it has on banks desire to lend.